ex99.htm

DES MOINES, Iowa (July 23, 2009) - EMC Insurance Group Inc. (Nasdaq/NGS:EMCI) today reported operating income of $6,379,000 ($0.48 per share) for the second quarter ended June 30, 2009, compared to an operating loss of $1,181,000 ($0.09 per share) for the second quarter of 20081. For the six-month period ended June 30, 2009, operating income was $17,768,000 ($1.34 per share) compared to $8,930,000 ($0.65 per share) for the same period in 2008.

Net income, including realized investment gains and losses, totaled $6,967,000 ($0.53 per share) for the second quarter of 2009 compared to a net loss of $940,000 ($0.07 per share) for the second quarter of 2008. For the six-month period ended June 30, 2009, net income was $12,771,000 ($0.96 per share) compared to $7,279,000 ($0.53 per share) for the same period in 2008.

“Through the first six months of 2009 our operating results are pretty much in line with our expectations,” stated Bruce G. Kelley, President and Chief Executive Officer. “Premium rates continue to show some signs of stabilization and storm losses, while slightly higher than our 10-year average, are significantly lower than the record amount experienced in 2008. We continue to review and adjust our branch operations to keep current with changing market conditions and to maximize our earnings potential; however, we do not anticipate any major changes to our operating plan during the remainder of the year.”

Investment income decreased 6.9 percent to $11,173,000 for the second quarter of 2009 from $11,999,000 for the same period in 2008. For the six-month period ended June 30, 2009, net investment income decreased 2.0 percent to $23,450,000 from $23,940,000 for the same period in 2008. This decrease in investment income is attributed to a high level of call activity that occurred on the Company’s U.S. Government Agency securities during the first quarter of 2009 as a result of the low interest rate environment, a decline in yield on short-term investments and the elimination of dividends on the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) preferred stocks in 2008. The proceeds from the called securities are being invested in short-term securities until attractive long-term opportunities can be identified.

Catastrophe and storm losses totaled $9,065,000 ($0.45 per share after tax) in the second quarter of 2009 compared to a record $23,518,000 ($1.12 per share after tax) in the second quarter of 2008. For the first six months of 2009, catastrophe and storm losses totaled $12,777,000 ($0.63 per share after tax) compared to $29,248,000 ($1.39 per share after tax) for the same period in 2008. Catastrophe and storm losses accounted for 6.8 percentage points of the combined ratio for the first six months of 2009, which is slightly higher than the 10-year average of 6.5 percentage points.

Large losses, which the Company defines as losses greater than $250,000, excluding catastrophe and storm losses, increased to $7,356,000 ($0.36 per share after taxes) in the second quarter of 2009 from $6,330,000 ($0.30 per share after taxes) for the same period in 2008. For the first six months of 2009, large losses totaled $15,370,000 ($0.75 per share after taxes), compared to $12,336,000 ($0.58 per share after taxes) for the same period in 2008.

Based on actual results for the first six months of 2009 and management’s expectations for the remainder of the year, management is increasing its 2009 operating income guidance from the previous range of $1.45 to $1.70 per share to a revised range of $1.80 to $2.05 per share. The revised range is based on a projected GAAP combined ratio of 103.5 percent for the year.

As of June 30, 2009, 601,119 shares of the Company’s common stock have been purchased under the Company’s $25 million stock repurchase program at a cost of approximately $15.0 million. The timing and terms of the purchases are determined by management based on market conditions, and the transactions are conducted in accordance with the applicable rules of the SEC. Common stock purchased under this program is being retired by the Company. The Company’s parent organization, Employers Mutual Casualty Company, has a stock purchase program in place as well, with about $4.5 million of its $15 million authorization remaining. This program is currently dormant and will not be reactivated until the Company’s repurchase program is completed.

The Company will hold an earnings teleconference call at 11:00 a.m. eastern daylight time on July 23, 2009 to allow securities analysts, stockholders and other interested parties the opportunity to hear management discuss the Company’s results for the first six months of 2009, as well as its expectations for the remainder of the year. Dial-in information for the call is toll-free 1-877-407-8031 (International: 1-201-689-8031). The event will be archived and available for digital replay through August 6, 2009. The replay access information is toll-free 1-877-660-6853 (International: 1-201-612-7415); passcodes required for playback: account number 286, conference ID number 327390.

Members of the news media, investors and the general public are invited to access a live webcast of the conference call via http://www.investorcalendar.com or the Company’s investor relations page at www.emcins.com/ir. The webcast will be archived and available for replay until July 23, 2010. A transcript of the teleconference will also be available on the Company’s website shortly after the completion of the teleconference.

EMC Insurance Group Inc., the publicly-held insurance holding company of EMC Insurance Companies, owns subsidiaries with operations in property and casualty insurance and reinsurance. EMC Insurance Companies is one of the largest property and casualty entities in Iowa and among the top 60 insurance entities nationwide based on premium volume. For more information, visit our website www.emcinsurance.com.

The Private Securities Litigation Reform Act of 1995 provides issuers the opportunity to make cautionary statements regarding forward-looking statements. Accordingly, any forward-looking statement contained in this report is based on management’s current beliefs, assumptions and expectations of the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions and expectations can change as the result of many possible events or factors, not all of which are known to management. If a change occurs, the Company’s business, financial condition, liquidity, results of operations, plans and objectives may vary materially from those expressed in the forward-looking statements. The risks and uncertainties that may affect the actual results of the Company include, but are not limited to, the following:

¹The Company uses a non-GAAP financial measure called “operating income” that management believes is useful to investors because it illustrates the performance of our normal, ongoing operations, which is important in understanding and evaluating our financial condition and results of operations. While this measure is consistent with measures utilized by investors to evaluate performance, it is not a substitute for the U.S. GAAP financial measure of net income. Therefore, the Company has provided the following reconciliation of this non-GAAP financial measure to the U.S. GAAP financial measure of net income. Management also uses non-GAAP financial measures for goal setting, determining employee and senior management awards and compensation, and evaluating performance.

Quarter Ended June 30, 2009	Property and Casualty Insurance			Reinsurance			Parent Company			Consolidated
Revenues:
Premiums earned	$	76,546,730		$	19,551,276		$	-		$	96,098,006
Investment income, net		8,332,816			2,838,412			1,390			11,172,618
Other income		198,272			-			-			198,272
		85,077,818			22,389,688			1,390			107,468,896
Losses and expenses:
Losses and settlement expenses		50,982,026			14,182,225			-			65,164,251
Dividends to policyholders		1,926,476			-			-			1,926,476
Amortization of deferred policy acquisition costs		18,295,137			3,227,018			-			21,522,155
Other underwriting expenses		9,590,347			716,971			-			10,307,318
Interest expense		225,000			-			-			225,000
Other expenses		175,195			(241,995	)		404,722			337,922
		81,194,181			17,884,219			404,722			99,483,122
Operating income (loss) before income taxes		3,883,637			4,505,469			(403,332	)		7,985,774
Realized investment losses		699,368			205,799			-			905,167
Income (loss) before income taxes		4,583,005			4,711,268			(403,332	)		8,890,941
Income tax expense (benefit):
Current		700,344			1,287,224			(141,166	)		1,846,402
Deferred		83,182			(5,775	)		-			77,407
		783,526			1,281,449			(141,166	)		1,923,809
Net income (loss)	$	3,799,479		$	3,429,819		$	(262,166	)	$	6,967,132
Average shares outstanding											13,235,928
Per Share Data:
Net income (loss) per share - basic and diluted	$	0.29		$	0.26		$	(0.02	)	$	0.53
Catastrophe and storm losses (after tax)	$	(0.40	)	$	(0.05	)	$	-		$	(0.45	)
Dividends per share										$	0.18
Other Information of Interest:
Net written premiums	$	80,557,228		$	18,591,374		$	-		$	99,148,602
Catastrophe and storm losses	$	7,973,720		$	1,090,954		$	-		$	9,064,674
GAAP Combined Ratio:
Loss ratio		66.6	%		72.5	%		-			67.8	%
Expense ratio		38.9	%		20.2	%		-			35.1	%
		105.5	%		92.7	%		-			102.9	%

Quarter Ended June 30, 2008	Property and Casualty Insurance			Reinsurance			Parent Company			Consolidated
Revenues:
Premiums earned	$	78,463,944		$	18,153,752		$	-		$	96,617,696
Investment income, net		8,947,910			3,010,099			41,345			11,999,354
Other income		160,571			-			-			160,571
		87,572,425			21,163,851			41,345			108,777,621
Losses and expenses:
Losses and settlement expenses		66,543,098			13,793,879			-			80,336,977
Dividends to policyholders		1,851,840			-			-			1,851,840
Amortization of deferred policy acquisition costs		18,367,821			3,526,349			-			21,894,170
Other underwriting expenses		7,680,153			330,283			-			8,010,436
Interest expense		225,000			-			-			225,000
Other expenses		154,370			(77,770	)		333,419			410,019
		94,822,282			17,572,741			333,419			112,728,442
Operating income (loss) before income taxes		(7,249,857	)		3,591,110			(292,074	)		(3,950,821	)
Realized investment gains		291,436			79,534			-			370,970
Income (loss) before income taxes		(6,958,421	)		3,670,644			(292,074	)		(3,579,851	)
Income tax expense (benefit):
Current		(3,066,352	)		1,541,311			(102,226	)		(1,627,267	)
Deferred		(362,376	)		(649,878	)		-			(1,012,254	)
		(3,428,728	)		891,433			(102,226	)		(2,639,521	)
Net income (loss)	$	(3,529,693	)	$	2,779,211		$	(189,848	)	$	(940,330	)
Average shares outstanding											13,653,462
Per Share Data:
Net income (loss) per share - basic and diluted	$	(0.26	)	$	0.20		$	(0.01	)	$	(0.07	)
Catastrophe and storm losses (after tax)	$	(1.05	)	$	(0.07	)	$	-		$	(1.12	)
Dividends per share										$	0.18
Other Information of Interest:
Net written premiums	$	79,918,030		$	16,835,091		$	-		$	96,753,121
Catastrophe and storm losses	$	21,966,957		$	1,550,556		$	-		$	23,517,513
GAAP Combined Ratio:
Loss ratio		84.8	%		76.0	%		-			83.1	%
Expense ratio		35.6	%		21.2	%		-			32.9	%
		120.4	%		97.2	%		-			116.0	%

Six Months Ended June 30, 2009	Property and Casualty Insurance			Reinsurance			Parent Company			Consolidated
Revenues:
Premiums earned	$	152,628,332		$	35,924,222		$	-		$	188,552,554
Investment income, net		17,552,335			5,883,461			14,057			23,449,853
Other income		351,258			-			-			351,258
		170,531,925			41,807,683			14,057			212,353,665
Losses and expenses:
Losses and settlement expenses		91,827,193			27,113,672			-			118,940,865
Dividends to policyholders		5,756,082			-			-			5,756,082
Amortization of deferred policy acquisition costs		37,173,220			6,359,641			-			43,532,861
Other underwriting expenses		18,362,521			1,075,080			-			19,437,601
Interest expense		450,000			-			-			450,000
Other expenses		406,329			(393,124	)		717,949			731,154
		153,975,345			34,155,269			717,949			188,848,563
Operating income (loss) before income taxes		16,556,580			7,652,414			(703,892	)		23,505,102
Realized investment losses		(5,090,803	)		(2,596,340	)		-			(7,687,143	)
Income (loss) before income taxes		11,465,777			5,056,074			(703,892	)		15,817,959
Income tax expense (benefit):
Current		4,763,021			1,910,725			(246,362	)		6,427,384
Deferred		(2,490,082	)		(890,338	)		-			(3,380,420	)
		2,272,939			1,020,387			(246,362	)		3,046,964
Net income (loss)	$	9,192,838		$	4,035,687		$	(457,530	)	$	12,770,995
Average shares outstanding											13,242,831
Per Share Data:
Net income (loss) per share - basic and diluted	$	0.69		$	0.30		$	(0.03	)	$	0.96
Catastrophe and storm losses (after tax)	$	(0.50	)	$	(0.13	)	$	-		$	(0.63	)
Dividends per share										$	0.36
Book value per share										$	23.22
Effective tax rate											19.3	%
Annualized net income as a percent of beg. SH equity											9.0	%
Other Information of Interest:
Net written premiums	$	152,586,458		$	35,520,874		$	-		$	188,107,332
Catastrophe and storm losses	$	10,218,030		$	2,558,653		$	-		$	12,776,683
GAAP Combined Ratio:
Loss ratio		60.2	%		75.5	%		-			63.1	%
Expense ratio		40.1	%		20.7	%		-			36.4	%
		100.3	%		96.2	%		-			99.5	%

Six Months Ended June 30, 2008	Property and Casualty Insurance			Reinsurance			Parent Company			Consolidated
Revenues:
Premiums earned	$	157,554,354		$	34,041,127		$	-		$	191,595,481
Investment income, net		17,937,726			5,922,765			79,096			23,939,587
Other income		307,898			-			-			307,898
		175,799,978			39,963,892			79,096			215,842,966
Losses and expenses:
Losses and settlement expenses		114,177,940			26,165,745			-			140,343,685
Dividends to policyholders		2,276,008			-			-			2,276,008
Amortization of deferred policy acquisition costs		37,277,761			7,127,506			-			44,405,267
Other underwriting expenses		16,000,163			1,129,738			-			17,129,901
Interest expense		439,375			-			-			439,375
Other expenses		298,876			294,203			634,937			1,228,016
		170,470,123			34,717,192			634,937			205,822,252
Operating income (loss) before income taxes		5,329,855			5,246,700			(555,841	)		10,020,714
Realized investment losses		(1,767,491	)		(773,516	)		-			(2,541,007	)
Income (loss) before income taxes		3,562,364			4,473,184			(555,841	)		7,479,707
Income tax expense (benefit):
Current		(684,273	)		1,959,315			(194,544	)		1,080,498
Deferred		265,517			(1,144,964	)		-			(879,447	)
		(418,756	)		814,351			(194,544	)		201,051
Net income (loss)	$	3,981,120		$	3,658,833		$	(361,297	)	$	7,278,656
Average shares outstanding											13,715,977
Per Share Data:
Net income (loss) per share - basic and diluted	$	0.29		$	0.27		$	(0.03	)	$	0.53
Catastrophe and storm losses (after tax)	$	(1.31	)	$	(0.08	)	$	-		$	(1.39	)
Dividends per share										$	0.36
Book value per share										$	25.52
Effective tax rate											2.7	%
Annualized net income as a percent of beg. SH equity											4.0	%
Other Information of Interest:
Net written premiums	$	154,297,213		$	33,547,728		$	-		$	187,844,941
Catastrophe and storm losses	$	27,615,451		$	1,632,310		$	-		$	29,247,761
GAAP Combined Ratio:
Loss ratio		72.5	%		76.9	%		-			73.3	%
Expense ratio		35.2	%		24.2	%		-			33.3	%
		107.7	%		101.1	%		-			106.6	%

	June 30, 2009		December 31, 2008
ASSETS
Investments:
Fixed maturities:
Securities held-to-maturity, at amortized cost
(fair value $506,763 and $572,852)	$	462,077	$	534,759
Securities available-for-sale, at fair value
(amortized cost $763,299,308 and $821,306,951)		771,346,101		812,868,835
Fixed maturity securities on loan:
Securities available-for-sale, at fair value
(amortized cost $22,844,456 and $8,923,745)		23,296,381		8,950,052
Equity securities available-for-sale, at fair value
(cost $70,433,905 and $75,025,666)		91,138,757		88,372,207
Other long-term investments, at cost		57,546		66,974
Short-term investments, at cost		115,804,852		54,373,082
Total investments		1,002,105,714		965,165,909

Balances resulting from related party transactions with
Employers Mutual:
Reinsurance receivables		33,986,093		36,355,047
Prepaid reinsurance premiums		4,358,746		4,157,055
Deferred policy acquisition costs		35,180,992		34,629,429
Other assets		2,894,716		2,534,076

Cash		219,774		182,538
Accrued investment income		10,128,567		12,108,129
Deferred policy acquisition costs		4,331		-
Accounts receivable		258,581		23,041
Income taxes recoverable		3,485,219		11,859,539
Deferred income taxes		25,099,680		30,819,592
Goodwill		941,586		941,586
Securities lending collateral		24,082,180		9,322,863
Total assets	$	1,142,746,179	$	1,108,098,804

	June 30, 2009		December 31, 2008
LIABILITIES
Balances resulting from related party transactions with
Employers Mutual:
Losses and settlement expenses	$	560,571,821	$	573,031,853
Unearned premiums		154,036,757		154,446,205
Other policyholders' funds		8,697,986		6,418,870
Surplus notes payable		25,000,000		25,000,000
Indebtedness to related party		8,964,127		20,667,196
Employee retirement plans		21,332,191		19,331,007
Other liabilities		32,691,818		16,964,452

Unearned premiums		21,655		-
Securities lending obligation		24,082,180		9,322,863
Total liabilities		835,398,535		825,182,446

STOCKHOLDERS' EQUITY
Common stock, $1 par value, authorized 20,000,000
shares; issued and outstanding, 13,238,284
shares in 2009 and 13,267,668 shares in 2008		13,238,284		13,267,668
Additional paid-in capital		95,193,211		95,639,349
Accumulated other comprehensive income (loss)		6,327,009		(9,930,112	)
Retained earnings		192,589,140		183,939,453
Total stockholders' equity		307,347,644		282,916,358
Total liabilities and stockholders' equity	$	1,142,746,179	$	1,108,098,804

	June 30, 2009
($ in thousands)	Amortized Cost		Fair Value		Percent of Total Fair Value			Carrying Value
Fixed maturity securities held-to-maturity	$	462	$	507		0.1	%	$	462
Fixed maturity securities available-for-sale		786,144		794,642		79.3	%		794,642
Equity securities available-for-sale		70,434		91,139		9.1	%		91,139
Cash		220		220		-			220
Short-term investments		115,805		115,805		11.5	%		115,805
Other long-term investments		57		57		-			57
	$	973,122	$	1,002,370		100.0	%	$	1,002,325

	December 31, 2008
($ in thousands)	Amortized Cost		Fair Value		Percent of Total Fair Value			Carrying Value
Fixed maturity securities held-to-maturity	$	535	$	573		0.1	%	$	535
Fixed maturity securities available-for-sale		830,231		821,819		85.1	%		821,819
Equity securities available-for-sale		75,026		88,372		9.2	%		88,372
Cash		182		182		-			182
Short-term investments		54,373		54,373		5.6	%		54,373
Other long-term investments		67		67		-			67
	$	960,414	$	965,386		100.0	%	$	965,348

	Three Months Ended June 30, 2009						Six Months ended June 30, 2009
	Percent of Net Written Premiums			Percent of Increase/ (Decrease) in Net Written Premiums			Percent of Net Written Premiums			Percent of Increase/ (Decrease) in Net Written Premiums
Property and Casualty Insurance
Commercial Lines:
Automobile		17.7	%		(1.2	) %		17.7	%		(4.3	) %
Liability		16.6	%		(7.8	) %		17.0	%		(7.8	) %
Property		16.5	%		6.0	%		16.3	%		3.9	%
Workers' Compensation		15.5	%		0.8	%		16.0	%		0.8	%
Other		2.5	%		(0.5	) %		2.3	%		(0.2	) %
Total Commercial Lines		68.8	%		(0.8	) %		69.3	%		(2.1	) %

Personal Lines:
Automobile		7.1	%		20.3	%		6.8	%		11.2	%
Property		5.3	%		0.5	%		4.8	%		(1.9	) %
Liability		0.1	%		(7.3	) %		0.2	%		(7.5	) %
Total Personal Lines		12.5	%		10.7	%		11.8	%		5.2	%
Total Property and Casualty Insurance		81.3	%		0.8	%		81.1	%		(1.1	) %

Reinsurance		18.7	%		10.4	%		18.9	%		5.9	%
Total		100.0	%		2.5	%		100.0	%		0.1	%

	Three Months Ended June 30,					Six Months Ended June 30,
	2009		2008			2009			2008

Operating income (loss)	$	6,378,774	$	(1,181,460	)	$	17,767,638		$	8,930,311
Net realized investment gains (losses)		588,358		241,130			(4,996,643	)		(1,651,655	)
Net income (loss)	$	6,967,132	$	(940,330	)	$	12,770,995		$	7,278,656